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We consider an economy consisting of a finite number of agents located on a
one-dimensional torus. Time is discrete. The agents interact sequentially.
Each agent buys a vector of goods from its left neighbour, produces some
other goods, sells goods to its right neighbour and consumes the rest.
Thus, there are two opposite fluxes on the torus - goods and money. Each
agent attempts to maximize a scalar function (an "utility function") of the
produced and consumed quantities w.r.t its production and exchange
decision, subject to different instantaneous and intertemporal balance
requirements. Information is local - each agent knows only the history of
its own buy, sell, and production decisions. Formally, the economy is thus
described as a set of coupled non-linear difference equations.
We are mostly interested in the transitory and long-term dynamics of the economy when, e.g., the money available to the agents is subject to exogenous chocks. In particular, can the economy reach an efficient quasi steady-state where the individual utilities are maximized in the vectorial sense? Can recurrent changes in the quantity of money improve the efficiency of the steady-state and/or of the transitory dynamics? Economically important extensions of the model would imply, among others, replacing the simple one-dimensional torus exchange topology by more complex, multi-dimensional networks. These networks could be exogenously given or, more interestingly, endogenously evolving. |